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Hurdles to resolving the foreclosure crisis

June 24, 2009 | 3:22
pm

Even with loan modifications and refinancing programs moving forward, the end of the foreclosure crisis is not around the corner, a panel of government officials and consumer advocates told real estate reporters and editors at a recent conference.

Among the factors slowing progress are loan servicers still gearing up for the task, the recession and for-profit foreclosure prevention firms handing out misinformation.

With about three-quarters of mortgage servicers onboard, Deputy Treasury Secretary Seth Wheeler said the administration's loan modification program "is not performing up to expectations yet." About 150,000 trial modifications have been completed and, as servicers work to beef up their staffing and training, tens of thousands are in the works. The goal is 9 million reworked mortgages over the next several months, Wheeler said.

Economic conditions, however, are working against refinancing, said John Walsh, chief of staff of the Office of the Comptroller of the Currency.

"The continued decline in home prices of course makes refinancing more difficult," Walsh said. And unemployment is "only beginning to take its toll now." The agency is tracking data and will report on progress at the end of the month. A 52% failure rate was reported in the fall for mortgage modifications.

David Berenbaum, vice president of the National Community Reinvestment Coalition, called on newspapers to stop running ads by "for-profit racketeers who charge on average $2,900 to consumers for poor advice." Examples he cited included counsel to not pay the mortgage or contact the service provider. HUD-approved counselors will help consumers for free.

Among organizations administering foreclosure-mitigation counseling services is NeighborWorks America, a congressionally chartered nonprofit network of more than 240 community development and affordable housing organizations.

Ken Wade, chief executive officer of NeighborhoodWorks, said there needs to be "transparency on results" and more information on people who are getting assistance "to see what's working."

If the new programs can keep up with the changing nature of the nation's housing problems, he said, they "have a better chance at working."